Forging America: The History of Bethlehem Steel - Chapter 5

Eugene was strong, active and smart in school, though he had trouble with spelling. Convinced that ''a healthy mind needs a healthy body,'' he prided himself on how much bagged grain and corn he could carry on his shoulder. He played baseball often and with a passion. He trudged through the local marshes and swamps with a gun in his hand, searching for game. He showed a talent for salesmanship, setting traps for muskrats and selling their skins for 17 cents each.

He was interested in electricity and engineering. In 1892, when he graduated first in his class from the Goshen Public School, he spoke at the Cape May County Courthouse on how industry is ''fortune's right hand.''

After attending Pennington Seminary, a preparatory school just north of Trenton, he entered Lehigh University with Gator to study electrical engineering. He won a mathematics prize his freshman year and, as a sophomore, a scholarship endowed by Bethlehem Iron Co. Director Elisha P. Wilbur. He was captain of Lehigh's baseball team for two seasons and was considered a fast, smart shortstop.

When the National League's Boston Beaneaters played an exhibition game against Lehigh, Grace hit a home run off one of their best pitchers, Kid Nichols. Impressed, the Beaneaters (later the Braves) offered Grace $200 a month to be their shortstop. But he wasn't interested, figuring that a career on the diamond would leave him washed up by the time he was 35. ''I don't think I went to Lehigh to learn to play baseball,'' he said.

Instead, he accepted an offer to work for the new Bethlehem Steel Co. from company executive Archibald Johnston, a Lehigh graduate who was dazzled by Grace's play in a game against Lafayette College.

Grace graduated first in Lehigh's Class of 1899 and gave his valedictorian address on the future of electricity. Just days later, on June 29, he started work as an electric crane operator at the South Bethlehem plant for $1.80 a day  15 cents an hour and a 12-hour day. At the time, Bethlehem was a small ordnance, heavy forgings and railmaker with 3,500 employees. Just a few months earlier, its directors had formed the Bethlehem Steel holding company to raise money from the sale of stock and to lease the Bethlehem Iron Co.

Schwab bought Bethlehem Steel in 1901 and folded it into the U.S. Shipbuilding Co. merger the next year. Grace's observations on ways to cut waste got him noticed by the bosses, who promoted him to superintendent of yards and transportation.

One day in 1902, according to Porter's book, Grace heard a commotion and a clatter of hooves on one of the brick streets near the mill. Something had spooked a horse pulling a carriage, causing the animal to rear and bolt. Grace ran into the street, grabbed the reins and brought the horse to a stop.

The carriage rider was Marion Brown, daughter of a former South Bethlehem burgess, the equivalent of today's mayor. A courtship began, and on June 12, 1902, Eugene, who was 25, and Marion, 21, were married. The next year, Marion gave birth to Emmeline. Charles would follow in 1905, and Eugene Jr. in 1914.

In December 1904, Schwab grabbed Bethlehem Steel and several other businesses from the failed shipbuilding merger and formed the Bethlehem Steel Corp.

One of Grace's jobs was switching the new owner's lavish private railcar, the Loretto, through the yards on the company's property. While inspecting a blast furnace one day, Schwab was surprised to see the yards landscaped with trees, plants and bushes. He turned to Grace and demanded, ''Whose idea was this?''

''Mine,'' Grace replied. ''Why let the mill look like a shambles?''

Schwab agreed, and the greenery stayed. He and Grace then talked about production, and Schwab was impressed with the young superintendent's knowledge.

Early in 1906, when Schwab asked his assistant, James H. Ward, to name the most outstanding employee, Ward replied, ''That's a foolish question. There is only one choice. E.G. Grace.''

Schwab had a mission for the 29-year-old: Go to Cuba and ''clean up the situation'' at Bethlehem's Juragua Iron Mines, which were plagued with high operating costs. Cuban ore made quality steel because it was low in phosphorus and rich in iron and nickel, a natural toughener. Juragua, on the south coast, was Bethlehem's main source of ore. Grace told Schwab he would go, but that he didn't see his future there. ''My ambitions,'' he said, ''lie in Bethlehem.''

In Cuba, Grace saw that the mine operation was inefficient because it wasn't mechanized. He set it up with machines, which lowered costs and raised productivity. As a result, Bethlehem's cost per ton of iron ore was $4.31, or $3 less than what U.S. Steel paid. A pleased Schwab gave Grace his wish. ''You go back to Bethlehem right now, and stay there,'' Schwab told him. ''I shall have work for you to do.''

Schwab made Grace assistant to the general superintendent. ''Certain management toes were tread on by this arrangement,'' Grace recalled in 1947 when he gave the first Schwab Memorial Lecture at the American Iron and Steel Institute, the industry trade group in New York. ''For the job in Cuba I was paid $500 a month and all living expenses. When I came back to Bethlehem, I found that certain cross-currents had developed. My immediate superiors put me to work at $175 a month and nothing else. Knowing the assurances I had had from Mr. Schwab, that didn't make me quit  as some people were doubtless hoping I would. I felt that I would be given an opportunity ultimately.''

Four months later, in June 1906, he was general superintendent. The next year he began supervising construction of the $5 million Grey mill. In 1908, when the mill began rolling the first wide-flange beams for America's skyscrapers, Schwab wanted to take on an advisory role and let Grace run the company as the best of his ''Boys of Bethlehem.'' Grace turned down the post of president, believing Schwab should keep it, and instead became general manager in charge of manufacturing, sales and purchasing. He was also elected to the board of directors.